"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong." ~ George Soros

Keep Calm and Trade the Flow

*edited some grammar errors, typos etc. as I was rushing when I wrote this lol.

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As I am posting this, PSEi has again reached new heights, closing at 6,527.99. Our market seems to be on the verge of breaking out again, probably to 6600-6700. Chart wise, many blue chips are moving forward with small volume. It’s quite understandable that the volume is low in these periods since most fund managers are still on vacation, probably? Let’s see the big flows next 2 weeks. This’ll determine where we’re headed. But so far so good, trends seem to be intact, and stocks that have consolidated in the short term are again trying to test their recent highs.

An example would be MEG.

Pardon the simple chart. But I think this would suffice, no need to keep it complicated.

In a bull market that seems to be winding down (for those who think that the market is too high, and that the risk-reward ratio at these levels are not worth it, they have a point), or at its late stages, conventional valuations will show that almost every blue will be on the expensive side. Growth stories, value plays, and other fundamentally good but hated stocks are bound to get flows as there will be many funds looking to get exposure in our stock market yet do not want to splurge much on what is deemed expensive, thus they rotate funds to cheap, and under positioned plays. Early in the year we saw the action on new issues such as DNL, & CPG, next in line you’ll see MEG as one of the top performers among the blues. Now you see PF easily gaining 20%+ YTD after consolidating for a long period in the 240 to 245 range. These are the kinds of plays that I’m looking for. I do not want expose myself in high beta stocks or widely positioned stocks such as SM, PGOLD, BDO, and ALI, they’re too cliche for me, though they definitely can move forward given the market sentiment. This is just my personal strategy for managing risk and attaining performance.

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So far so good, my port is at its highs, attaining a YTD performance of 14.56%, thanks to Pure Foods (PF). I’ve been whipsawed a couple of times on TA and NI. and now I’m back in TA again. I’ll just probably hold on this one. I’m having a hard time rotating between positions since most of the plays I choose really have potential, it’s just a matter of waiting it out. I plan to prepare for any coming correction by applying for a bigger margin soon, hopefully COL would give me 500 to 700k margin, so that I could abuse the movements of blues. What’s good about having limited funds is that you’re forced to trim the losers and go for winners, but, at times, when the market is misleading, and your main purpose is to position, it’s quite hard to find a balance. Sometimes, a loser may look like a loser only for a while. After you get out the position, it’ll then move and you’ll be like “ugghh”, “shit”. I guess it’s all about how you work with the money that you have.

People have been asking about Margins. Just to clarify my Total Account Equity is 765k. Due to my access to COL’s margins (as seen here https://www.colfinancial.com/ape/Final2/home/pdfs/col_margin_primer.pdf ), I can play around an extra 200k. You can apply for margins as long as your account is 200k and above, and if they approve you can garner access to margins as big as your total equity value. Please be careful! Margins are not for the light-hearted. It requires tight risk management, proper sizing, conviction, skill, good decision making etc, otherwise you’ll end up getting burned. It’s just that we’re on a bull market that it may seem easy to throw everything you can at almost any blue chip, but if sentiments change, things wouldn’t look that easy. So please tread lightly. 🙂

There are two things that scare me right now, I’ve read a report that 60% of US investors or foreign funds are bullish, and that on a certain parameter of Merryl Lynch we’re on one of the most bullish times in the past 5 years. Nothing wrong with having the crowd back the bullish notion, it’s just that I don’t like going with the crowd too much as the MAJORITY tend to be wrong. At the same time, it’s hard to go against government intervention and at these times we are getting WAY TOO MUCH intervention, all around the globe HAHAHAHA.. Things are getting HOT. Hihihi. 🙂